Motilal Oswal's research report on Barbeque Nation Hospitality
Barbeque Nation Hospitality (BARBEQUE) reported a weak performance in 2QFY23. Its revenue and EBITDA declined 3% and 24% YoY, respectively, primarily due to an 11% decrease in same-store sales (SSS). Improvement in gross margin (+190bp QoQ) cushioned the decline in EBITDA margin, which contracted 460bp YoY. The net store additions were subdued in 2Q. Given the soft demand environment, management has cut its new store addition guidance to 4 (net) in FY24 from 31 in FY23, shutting down lossmaking stores. Management plans to revive its store expansion strategy in FY25. It indicated that the last fortnight showcased early signs of recovery, which will be key to reviving the store-level profitability.
Outlook
The stock is currently trading at 14x FY25E EV/EBITDA (pre-Ind-AS). We reiterate our Neutral rating on the stock with a TP of INR650, based on 15x FY25E EV/EBITDA (pre-Ind-AS).
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